According to economic experts interviewed by Iltalehti, the central goal of the government’s 9 billion euro adjustment measures is not being realized. In particular, employment measures and savings in welfare areas raise doubts.
Economic experts Ilkka Kaukoranta, Penna Urrila, Aki Kangasharju, Markus Lahtinen and Lauri Holappa responded to Iltalehti’s survey.
Prime minister Petteri Orpon At the center of the economic policy of the government led by (kok) is to fold Finland’s indebtedness. Therefore, the government is committed to adjusting the public finances during the election period with adjustment measures of nine billion euros.
Iltalehti asked five economic experts whether they believe that the adjustments will be implemented in full. No one thought this would happen. The executive director of the Center for New Economic Thinking (Utak) most directly blamed the government for staying on target Lauri Holappa.
– The figure includes savings from the government’s labor market weakening and measures to improve welfare areas for almost three billion euros. These savings packages are mostly based on wishful thinking and I don’t think they will be realized except in small parts at most, Holappa states.
He also points out that the nine billion euros does not take into account new spending increases.
– In reality, there is a net adjustment of around 4.5 billion euros, which is a considerable amount as well, Holappa estimates.
Big risk in welfare areas
The chief economist of the Finnish Confederation of Business and Industry had the most positive attitude towards the goal Pen Screams and CEO of Etla, a research institute for business life Aki Kangasharju.
– I would assume that 8 billion euros will be collected, because the effect of the municipalities’ and welfare regions’ own actions is calculated to be around one billion euros, says Kangasharju.
Urrila, on the other hand, estimates that reaching the goal is still uncertain. He considers the biggest risk to be that the savings targets set for welfare areas will fail.
– Also, the balancing of the public finances, which is aimed at through employment, may not be fully realized during the term of government, Urrila writes.
The CEO of Pellervo economic research is on the same lines Markus Lahtinen. He estimates that the savings targeted specifically in the welfare areas will fail and the balancing of the public finances targeted through employment will not be realized during the full term of government.
SAK’s chief economist Ilkka Kaukoranta on the other hand, like Holapa, criticizes the fact that the government does not include actions that weaken the public economy, such as the investment program, in the nine billion total. Like other economic experts, Kaukoranta also mentions the savings in welfare areas and the uncertain results of employment measures as a risk.
According to the government program, the government aims for 100,000 new jobs during the government period, and it should strengthen the public finances by two billion euros. To achieve this goal, the government has several labor market reforms. They have aroused criticism both in employee organizations and in the opposition.
To be continued by future governments
Iltalehti also asked economic experts for an assessment of the possible need for further adjustment during this election period. None of the respondents is enthusiastic about making further adjustments, even though the government does not seem to be sticking to its goal.
EK’s Urrila and Etla’s Kangasharju are most positive about possible additional adaptations. Urrila stresses that the development career of public finance largely depends on economic development. He does not comment on the size category of additional adjustments.
– The most important thing at this stage is to ensure the implementation of the solutions made and, if possible, to find actions that accelerate economic growth, which, however, do not endanger the balancing of the public finances – a good example of this is the investment tax incentive that is being prepared, Urrila states.
Kangasharju, on the other hand, states that additional adaptation is needed if there is more left over from the adaptation target than has been calculated for the adaptation measures of welfare areas.
– It is more important that Finland continues with the current adjustment line and pace in the coming government terms, and towards the end of this government term we will still see decent actions supporting long-term economic growth, Kangasharju writes.
Too much adaptation brings problems
A more critical position is represented by SAK’s Kaukoranta, PTT’s Lahtinen and Utak’s Holappa. Kaukoranta points out that excessive adaptation weakens economic development. He does not consider further adjustments to be meaningful in this election period.
– The most harmful cuts could be replaced by other types of adjustment measures, such as fixing the dividend taxation of unlisted companies, Kaukoranta suggests.
Lahtinen, on the other hand, believes that further adjustments are not needed this election period. He is concerned about the vicious circle lurking in primary care surgeries.
– We easily end up with decisions that reduce the deficit only temporarily, and at worst turn against their purpose in the long term. An example of such a decision is the reduction of primary health care resources, which will increase the costs of expensive specialized medical care in the future. The threat is a vicious cycle of adjustment measures if the amount of adjustment in one government term is very large.
However, Lahtinen considers it necessary that the next government continues to strengthen the public finances. He also does not take a position on the measurement category, because “the operating environment is full of risks”.
Holappa is on the same lines as Kaukoranta and Lahtinen. He also brings out the concern about the negative cycle that feeds him.
– In principle, fiscal policy should not be tuned in such a way that it is tightened the more the worse the economic development gets. This kind of policy only exacerbates the downturn and can also lead to an increase in the debt ratio if the GDP development is very weak, Holappa states.
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